Balancing power and ethics: Chief executive officer impact on environmental, social, and governance reporting strategy in family vs. non-family firms

Environmental, social, and governance (ESG) disclosures are increasingly crucial for companies to build reputation and maintain investor trust. However, the credibility of these disclosures can be undermined by earnings management (EM), particularly in emerging markets such as Indonesia. This study examines the relationship between EM and ESG disclosure by explicitly comparing family and non-family firms and assessing the moderating role of chief executive officer (CEO) power. Using 200 observations of firms with ESG scores listed in Thomson Reuters from 2018 to 2022, this study employs Hausman test, panel regression, and causality tests. The results indicate that EM is more strongly associated with ESG disclosure in family firms, while CEO power, ownership, and prestige significantly moderate this relationship in non-family firms. These findings provide empirical evidence on ESG credibility in emerging markets and have important implications for regulators, investors, and other stakeholders in evaluating and enhancing corporate ESG reporting practices.